There are appropriate times for domestic preferences — you probably don’t want the Chicomms building your nuclear-missile-guidance systems. The interaction of security with procurement is one of the reasons why multinational free-trade agreements are often so long — exceptions have to be carefully specified. But that kind of thinking gets distorted very easily, especially if there’s a little bit of money floating around: Witness Senator Marco Rubio (R., Florida Crystals) and his silly insistence that subsidies for gazillionaire sugar barons are an urgent matter of national security.
How, exactly, is this in the national interest?
It is in the interest of those politically connected firms that make more money thanks to protectionist procurement rules, but that is offset by the fact that everybody else has to pay more — and the people who are doing the paying are Americans, too. And if we are paying more for nuts and bolts, that means less money left over for other spending — and other investments. And why bother trying to make your factory more efficient when you have a federally guaranteed price cushion not enjoyed by your competition?
You don’t actually make the country as a whole better off by overcharging Peter to overpay Paul. What you do is make everybody worse off by inhibiting the normal functioning of markets, in which the division of labor and comparative advantage work together to make the world more prosperous by making the most of the necessarily limited resources we have.